Eye on the Prize: Why an Established End Goal is VITAL to Your Investing Plan

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Hello, everyone! The last few weeks have been crazy busy here at the office. I have had several phone calls scheduled every day with potential clients. We have also been working tirelessly to get another business up and running, real estate consulting. And we have purchased another 5 properties ,which takes a lot of logistical fortitude. The theme of this past week was “seal the deal.”

One question that I seem to get asked on nearly every call I take — that I often just brush past with a short answer — seems to be prevalent among those just getting started. The question is: Why did you get into real estate and become an investor? Although my response is something I now regret, I have found that many, not all, have the same mindset, and it’s all wrong.

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My Start in Real Estate

When I started in real estate as an investor, I had done really well with some stock trades, I was reading a lot about finance and thought to myself, “Wow, this is simple. Anyone can do this with a loan.” I was right. I was also in the motivational mindset that being an investor brought me a higher status in life, and I really enjoyed playing the part. I was young. I had purchased several properties and found it was a great tool to assist in picking up chicks at the club.

Enter young, handsome and well-dressed me. Enter a great looking young lady and the topic that starts the conversation is, “So what do you do?” Why, I am a real estate investor! BOOM! I am now sad to say that it worked well — but none of it was really mine.

The bank owned the investment, and in some cases, I was not collecting enough on properties to service the debt so other properties picked up the slack. At that time the investment model in Australia was not based in sustainability or in cash flow, but instead in the appreciation game. Everyone was waiting for the market to go up, to get higher. It was unfortunate that I didn’t really know what I was doing.

Related: How to Better Utilize BiggerPockets to Reach Your Real Estate Goals

I bought in all the wrong areas, taking advice from people who were intentionally manipulating me to do the wrong thing. They made a lot of cash on me while my entire multi-million dollar portfolio was teetering on complete financial ruin. I had no goal set. I was just in it because it seemed good, and I wanted to build wealth in the worst way. The girls were a bonus!

Learning From Experience

I now get asked that question and think about all of the things I would have done differently. I had several properties in Australia and purchased several more in the US and had nothing to show for it but huge debt. Oh, I also had taxes. Huge tax bills that were also eating me alive. That type of investing was just not sustainable unless you had large amounts of cash to throw at it while you were waiting to sell out for a potential capital gain profit.

Today, several years later and a few hundred deals under my belt, all of my Australian portfolio has been sold off, thankfully. I focus on investing for cash flow without loans or hard money. Cash is my king, and cash flow is my queen. I stress the importance of educating yourself on the market and finding honest, trustworthy people on the ground to assist you. I also stress the importance of the end goal. The five year plan is critical to building a solid portfolio.

Related: Developing Your “Why”: How to Work for MORE Than Just Money

What to Ask Yourself BEFORE You Invest

You as an investor need to be picky, picky about the property you buy, the people you work with, and you need to know what you need as a return on that investment to support your end goal. Ask yourself these questions:

  1. What do you want to accomplish by investing in real estate? (Supplemental income, early retirement?)
  2. Do you have cash reserves, or will your investments be financed?
  3. How large of a portfolio can you see yourself having?
  4. What is your desired level of return?
  5. Do you have an exit plan in the event you need to sell out?
  6. Do you have a relationship with honest and trustworthy people for assistance?
  7. How can this investment allow you to live better, to accomplish your dreams and goals?

Some of these questions may not apply to you if you’re already building a portfolio or if you’re a seasoned real estate veteran. In my experience, if I would have answered these questions when I was getting started, I would have done things differently. Admittedly, I was young, dumb and just wanted to be an “investor.” I now know that there is a lot more to real estate, and it’s truly about building a long term lifestyle. Even more so, it’s about setting up your goals to support your dreams far into the future and not just for short term gratification.

I have made mistakes along my path and have learned so much about myself and what my goals mean to me.

Why do you invest in real estate? What mistakes have you made along the way?

Please reach out if you have any questions. I’m here to help.

About Author

Engelo Rumora

Engelo Rumora “The Real Estate Dingo" is a successful property investor, motivational speaker and serial entrepreneur that quit school at the age of 14 and played professional soccer at 18. He is also a soon to be published author along with becoming a TV personality in his very own real estate house flipping show. To find out more go to engelorumora.com . Engelo Rumora has been involved in over 400 real estate deals and founded five businesses in Ohio. The most successful is Ohio Cashflow, a company that specializes in providing turnkey properties in several Ohio markets. The newest venture is List’n Sell Realty, a real estate brokerage based in Toledo, Ohio and soon to be known as the #1 discount broker in the country.

10 Comments

  1. Ayodeji Kuponiyi

    Great post Engelo! I agree with with you when you said, “Cash is King & Cash Flow is Queen”. That hit home and I couldn’t have said it better. Like Nan, my current short term goal is to acheive $5000/month net cash flow. Having and knowing your end goal is vital and helpful to keep us new investors focus and grinding.

    • Engelo Rumora

      Hi Ayodeji,

      Thanks for your comment.

      I always suggest that everyone starts with an END GOAL and a time frame of achieving it. Then you work your way back and evaluate what needs to be done to make it happen. For example: How many buy and holds do you need or how many buy, fix and flips per months, etc…

      The level of risk will depend on your time frame. The longer the time frame is, the lower risk investing you can practice.

      Thanks and have a great day 🙂

  2. Michael Williams

    I am very picky about the people I work with. Even on linkedIn I don’t except all invitation and I read every profile that invites me and I want to invite into my circle. But I felt compelled to answer the questions that you have put forth to see where I am:

    1.What do you want to accomplish by investing in real estate? (Supplemental income, early retirement?)

    I have always known that Real Estate was the best avenue for the type of generational wealth I want to build for my family, but I was more comfortable with starting businesses; which all failed.

    2.Do you have cash reserves, or will your investments be financed?

    No cash reserves, all depleted on failed businesses and a geographical relocation with less pay. Wholesaling to build capital.

    3.How large of a portfolio can you see yourself having?

    Billion Dollar Empire in 10 years and I am well aware of the dedication and time needed to get there. I also know that education, attitude, and Relationships will lead the way.

    4.What is your desired level of return?

    To average 50%,- 70% return on investments.

    5.Do you have an exit plan in the event you need to sell out?

    Really interested in some best strategies suggestion from others here on the BP site for this step.

    6.Do you have a relationship with honest and trustworthy people for assistance?

    Building a team now. Getting to know a business partner that has access to funds. Have a great birddog guy, and some excellent new connections on BP. Always looking for people that understand Mastermind principles.

    7.How can this investment allow you to live better, to accomplish your dreams and goals?

    The many ways to cash flow and make quick income through real estate will create great opportunities for all of my other business ideas and inventions. It will help me accomplish my dream of breaking the poverty cycle in my family. I want that responsibility. I am ready to face any and all challenges or obstacles that WILL manifest.

    I am never above receiving advice from anyone here on BP. If you have suggestions for any of the answers I have posted please, please fell free to add value for me by sharing your wisdom.

    • Engelo Rumora

      Hi Michael,

      Bloody awesome reply to my blog 🙂

      Thanks and much appreciated.

      If I could give you one tip it would be this:

      Make your #1 focus the people you surround yourself with. Make sure they are Loyal, Honest, Not Greedy and Respectful.

      Every time I failed it was due to working with the wrong people.

      Thanks and have a great day.

  3. Tyrone Maxwell

    It’s a tough world, your were receiving information form folks whom you trusted whose intentions were to hurt you. I’m glad you figured it out before to late but what can new investors do when they seek help from others who have walked the roads that they desire?

  4. Engelo Rumora

    Hi Tyrone,

    Thanks for your comment.

    The best advice I could give is to be patient and not jump to any quick decision.

    Trust is built over time and not over 1 phone email, phone call or meeting.

    Please see a link to my Bigger Pockets podcast. I share some gems on how to eliminate non-genuine professionals – https://www.biggerpockets.com/renewsblog/2014/09/25/high-school-dropout-300-real-estate-deals/

    Thanks and have a great day.

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